Annual Review 2012-2013

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Report on Investments

Investments are centralized in the General Investment Fund (“the Fund”), which holds in trust the surplus operating funds, endowments, and long-term donor restricted funds of all units. Interest is paid to units based on prevailing market rates for similar financial instruments. Net profits from the Fund are used to offset costs of administration, as well as to make allocations to programs and services.

Allocations from investment income are based on a spending policy tied to long-term average rates of return, which helps mitigate volatility in the capital markets. In the year ended March 31, 2013, the Fund earned $65.1 million, incurred expenses of $3.2 million and paid interest on constituent accounts of $7.2 million, for a net income of $54.7 million. In accordance with the spending policy, $11.8 million was allocated to the operations of territorial and divisional headquarters, meaning funds have been transferred to the reserve to be used to fund future operations.

The Fund is managed by external investment managers in accordance with statements of investment beliefs and policy, which establish quality constraints, as well as prohibiting investment in companies whose primary business is the manufacture, distribution or promotion of alcohol, tobacco, pornography, gaming, gaming facilities, or armaments, as well as companies who are known to disregard environmental concerns. An investment advisory committee assists the Army by regularly reviewing both the investment policy, as well as individual manager’s performance compared to market benchmarks. Copies of the statements of investment policy and beliefs are available on the Army’s website, www.salvationarmy.ca.

The target, operating ranges and actual asset mix of the Fund as at March 31, 2013, was as follows:

Asset Class

Target

Range

Actual

Cash

0

0–10%

4%

Fixed Income

40%

35–45%

35%

Canadian Equities

30%

25–32.5%

30%

Foreign Equities

30%

25–32.5%

31%

100%

100%

100%

As of March 31, 2013, all asset classes were within the targeted range.